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Does AI Really Make Moderna (NASDAQ:MRNA) Stock a Buy?
Modern (NASDAQ:MRNA) shares have fallen from their all-time high. However, the company is once again on the move – in a good way. The stock has risen 68% in the past six months, with partnerships around artificial intelligence (AI) and positive cancer trial data attracting investor interest. Personally, though, I’m still not convinced that these developments make MRNA stock a buy and require more data before making a decision. For now, I remain neutral.
The Moderna and OpenAI partnership
In April, Moderna and OpenAI said they are deepening their partnership, announcing expanded access to ChatGPT Enterprise for the Moderna workforce. This collaboration allows the Moderna team to develop customizable GPTs (generative pre-training transformers) designed for specific purposes ranging from data analysis to imaging.
After a successful testing period that saw the creation of 750 custom GPTs and widespread adoption among employees, Moderna is now ready to roll out ChatGPT Enterprise to thousands of employees. According to OpenAI, one of the most important GPTs used by the Moderna team is Dose AI. GPT can help clinical trial teams understand the optimal dose to use by reviewing and analyzing clinical data.
“Dose ID GPT has the potential to increase the amount of work we can accomplish as a team. We can comprehensively evaluate these extremely large amounts of data and do so in a very efficient, secure and accurate way, while helping to ensure security and privacy,” said Meklit Workneh, Director of Clinical Development at Moderna, in a statement.
ChatGPT offers enormous potential and can help with a variety of tasks, from refining culinary skills to drug discovery. Its range of applications is enormous. However, ChatGPT does not thoroughly explain its calculations and does not provide sources, potentially creating problems that will need to be overcome. It’s also true that the benefits may take a while to become apparent.
Moderna’s cancer hopes
For a while, I thought of Moderna as uninvestable. The pandemic gave this mRNA-powered pharmaceutical company a unique opportunity to generate revenue. However, the COVID-19 vaccine, Spikevax, was its only marketable product and remains so. As such, investors should rightly be concerned about future revenues. The company reported $2.8 billion in sales of Spikevax in the fourth quarter of 2023 – a significant figure, but significantly lower than the pandemic.
Cancer vaccines are part of the company’s extensive portfolio and mRNA-4157 it is potentially one of the most interesting parts of the portfolio. In a Phase II trial, patients received immunotherapy treatment with pembrolizumab – a recognized standard of post-operative care – or pembrolizumab combined with mRNA-4157.
The story continues
The study provided two positive data. Firstly, it confirmed the favorable safety profile of the combination therapy. Moderna reported that there was no notable increase in toxicity or adverse effects for the combination treatment versus pembrolizumab monotherapy.
Second, recurrence-free survival data demonstrated that combination treatment was more effective than pembrolizumab monotherapy. Moderna noted that 78.6% of patients did not have a recurrence of their cancer 18 months after treatment, compared with 62.2% in the control group that received monotherapy.
mRNA-4157 was developed to treat patients with solid tumors of the head and neck. The preliminary data announcement sent shares to a three-month high in April.
Moderna patent dispute
While investors were excited by the test announcements, some analysts highlighted a potential flashpoint. Moderna uses intellectual property developed by Genevant Sciences and Arbutus Biopharma (NASDAQ:ABUS). The companies hold the patents on lipid nanoparticles (LNP). These are gene delivery vehicles that accommodate nucleic acids and proteins. In other words, they allow mRNA vaccines to escape the body’s immune system.
This technology enabled Spikevax’s success and is critical to other pipeline projects, but Genevant Sciences and Arbutus Biopharma claim that Moderna used LNP without adequately compensating the two companies or obtaining licensing. The claims were validated by the United States Patent and Trademark Office.
Furthermore, Genevant licenses the technology to other companies, proving that the patents are applicable. A ruling against Moderna could result in billions of dollars in compensation, worsening the company’s negative cash flow position.
Is Moderna Stock a Buy, According to Analysts?
Twilio shares are a Moderate Buy based on ratings from 18 analysts over the past three months. There are currently eight Buy, seven Hold and three Sell ratings. O MRNA stock price average target is $130.29, with a forecast high of $214 and a forecast low of $75. The average price target represents a potential downside of 1.3%.
The end result of Moderna’s actions
Moderna is developing a highly exciting and potentially commercially attractive pipeline of drugs and treatments using mRNA technology. There is great hope for its vaccine against solid neck and head tumors. However, these developments are overshadowed by claims from Genevant Sciences and Arbutus Biopharma that Moderna used their LNP technology without licensing. Given Moderna’s current situation, I think it’s very difficult to get behind the stock. So I’m neutral on that.